What Happened?

If you’ve bet on a game or an election through a prediction market app, whether that’s legal where you live is still being fought out in the courts, the states and a federal agency. One of the biggest of those apps, Kalshi, reported $800,000 in lobbying spending from July through September, up from $500,000 the quarter before and $190,000 a year earlier, according to its federal lobbying report and a Legis1 review of the filing. ​

That total includes what Kalshi pays outside firms. Six firms reported $485,000 from Kalshi for the quarter, led by Squire Patton Boggs at $180,000 and Miller Strategies at $120,000, and Forbes Tate Partners joined the roster in July.

Why Does It Matter To Me?

The Commodity Futures Trading Commission (CFTC), which oversees futures markets, proposed a rule on June 10 that would decide which of these contracts can be listed. It would define sports as “gaming” for the first time and review contracts one by one, with bets on final scores more likely to be allowed than bets on injuries or referee calls, according to a Congressional Research Service legal summary. Public comments closed July 27, and the rule isn’t final.

The courts are split. On Aug. 28, a federal appeals court ruling found Nevada can enforce its gambling laws against Kalshi’s sports contracts, since they likely aren’t the kind of federally regulated financial products that would override state law. The court sent the question about election contracts back to a lower court, and an appeals court covering New Jersey sided with Kalshi earlier this year.

Both Sides, Now

Kalshi and the CFTC say the federal government alone should regulate these markets. A CFTC spokesperson said the Nevada ruling “misread the statute,” and Kalshi said it will seek further review, The Block reported.

States want the final say. Attorneys general from 44 states told the CFTC in July that its proposal “goes well beyond its statutory authority.” Rep. Steven Horsford (D-NV) called the Nevada ruling “an important victory” and is pushing his Prediction Markets Are Gambling Act, while Rep. Jamie Raskin (D-MD) and Sen. Jeff Merkley (D-OR) introduced the STOP Corrupt Bets Act to ban bets on elections, sports, war and government actions.

What Happens Next?

The CFTC must still decide whether to finalize, change or drop its rule. With appeals courts disagreeing, the CFTC has said the dispute “calls out for resolution by the Supreme Court.” Until then, whether you can place a sports bet on a prediction market may depend on which state you’re in.

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